Monthly Income Plans in India

by Manshu on November 14, 2010

in Mutual Funds

Monthly Income Plans (MIPs) are gaining in popularity, and they came up in Miteysh Shah’s post and the comment section too, so I thought I’d do an introductory post about them with a list of available MIPs for Indian investors. Before we get to the list of MIPs, here are some things about them that you should keep in mind.

1. Monthly Income is not guaranteed: The first thing to know about Monthly Income Plans (MIPs) is that the monthly income is not guaranteed. They strive to provide you with a monthly income, but it’s not guaranteed, and depends on how well the fund is doing.

2. Primarily debt – funds: These funds primarily invest in debt with a small allocation in equity, and sometimes even in gold. So, if you are going to compare returns with another fund it should be a debt fund, hybrid favored towards debt or just a plain fixed deposit.

3. Most MIP funds have exit load if the exit is within a year: MIPs have no exit loads if you hold them for over a year, however they do have an exit load if you decide to exit in less than a year.

4. Returns can be negative: Since I compared this to a debt instrument I thought I’d specifically state that the returns on these funds could sometimes be negative also, so like other mutual fund investments it’s better to have a long-term perspective on MIPs also.

5. TDS on MIP: There is no TDS on MIP, but as I wrote earlier  this doesn’t mean that there is no tax altogether.

6. Dividend tax free in the hands of investors: The mutual fund needs to pay a dividend distribution tax, but the dividend itself is tax free in the hands of investors. So, the tax impact is shown in the NAV.

7. Capital Gains tax is also applicable to MIPs: MIPs also attract both long term and short-term capital gains as applicable on your holding period.

Before you get to the table listing the MIPs – let me talk about the two parameters I am using here, and why I’m using them.

1.Inception Date: The inception date shows you how long the fund has been around, and the longer the track record the better it is.

2.Compounded Annualized Returns since Inception: These returns are not comparable from one fund to another because different funds started at different times, and I am using the annualized returns since inception. The benefit of having this return is it can be viewed in conjunction with the inception date to see how long a track record a particular MIP has, and how has it performed in the given period, so that’s the reason I’ve kept it here.

With these points in mind – here is a partial list of the Monthly Income Plans currently offered in India.

S.No. Name of the Fund Inception Date Compounded Annualized Returns since inception
1 HDFC MF Monthly Income Plan December 26 2003 12.94%
2 HSBC MIP March 24 2004 8.53%
3 Birla Sunlife MIP October 11 2000 10.07%
4 Franklin Templeton India Monthly Income Plan September 28 2000 11.02%
5 ING MIP Fund February 23, 2004 5.86%
6 Kotak Income Plus December 2, 2003 6.65%
7 ICICI Prudential Monthly Income Plan November 10, 2000 9.64%
8 Reliance Monthly Income Plan January 13th 2004 12.11%
9 SBI Magnum Monthly Income Plan April 09, 2001 7.54%
10 Sundaram Monthly Income Plan Moderate January 2004 6.80%
11 UTI MIS Fund December 16, 2003 8.64%
12 Canara Robeco MIP April 4, 1998 10.31%
13 Tata MIP Plus January 27, 2004 7.44%
14 Principal Monthly Income Plan December 30 2003 9.66%
15 Bharti AXA Regular Return Fund March 18, 2009
16 Taurus MIP Advantage Fund NFO closed on July 23 2010
17 Religare MIP Plus NFO closed on 11th May 2010
18 Religare MIP NFO closed on 11th May 2010

I have tried to include as many MIPs as I could find, and I think I have included all the older ones, but if you see any missing then please leave a comment. I will continue building on this list as I get details on more MIPs.

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{ 4 comments… read them below or add one }

Sanjeev Mehrotra January 28, 2011 at 10:57 pm

If a salary person gives cash gift (thru bank transfer) to his wife from his taxable income and she invests this amount in fixed deposit. Will the interest income taxable in the hand of wife or Husband?

Reply

Manshu February 2, 2011 at 7:37 pm

Sanjeev,

I checked with a CA friend who said if the wife is working then its taxable in wife’s hand, and if she’s not then its taxable in husband’s hand

Reply

randy September 26, 2013 at 7:11 pm

sir,

what is the difference between

term and home insurance that banks usually insists for home loans.

is it true that term insurance expires soon after the closure of the loan.

let us say, if i take a home loan for 10 yrs tenure, and term insurance is for 10 yrs, and if i pay off the loan in 5 yrs, i wont get the pro rate premium refund for the remaining 5 years?is that correct
where as in the case of home insurance which is to insure the home building, i will get the premium refunded for the remaining years after the closure of the loan

kindly clarify

Reply

harineem September 27, 2013 at 10:39 am

DSPBR MIP is missing, decent performance.

Reply

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